From William Short
Paris June 19. 1791
I had the honor of addressing you by M. de Ternant1 three letters dated June 3. 5 & 10. In the first of them I informed you that the million of florins you had destined for this country would be paid immediately by the desire of this government to their bankers at Amsterdam.2 A difficulty has since arisen between them & the commissioners of the U. S.3 which it is necessary to explain to you, as well as what has led to it.
You will recollect that last fall a part of the reimbursement made to this country was by bills of exchange, & that the government had written to request that the rest should be paid to their bankers at Amsterdam. M. du Fresne’s letter4 went further & requested that in future the commissioners of the U. S. would pay such sums as might be destined for France, to the same bankers instead of remitting it by bills of exchange. The rate as you know was settled agreeably to that which was then current. It was evident that the commissioners were not pleased with this mode of payment & desired to have the remitting of the sums by bills. Still it appears to me so especially just & proper to comply with the request of the French government & so impossible to refuse it, the rate of exchange being settled agreeably to the common course that I did not hesitate to have the payment made in that manner. The commissioners made no other observations than that by remitting these sums gradually, the U. S. might derive advantages which they could not have by paying the whole sum at once at Amsterdam. I was not of the same opinion with respect to the advantage accruing to the U. S. because large remittances though made gradually must effect the exchange somewhat (as happened on the small part they remitted last fall) before completed, whereas if paid on the spot it may be regulated according to the rate of the moment. Besides even if this mode exposed the U. S. to the loss of small advantages, I am persuaded they would not think themselves justified truly in refusing this request of the French government, since the payment is of sums which became due long ago & at a time when the exchange was very different from what it is at present.
In order however that there might be no risk of disadvantage to the U. S. by any time elapsing between the moment of this reimbursement being made known & that of its being effected (as artificial means might be used for giving a momentary rise to the exchange) I thought it advisable to give previous notice to the commissioners that they might take the precautions which should appear to them proper if any were judged necessary. Accordingly on the 26th. of May I wrote to give them5 notice of this intended payment, adding that I should not mention it to the minister unless it became necessary, before recieving their answer; but if necessary I should do it supposing it could not possibly be attended with inconvenience. Having found it necessary & proper to mention this reimbursement to the minister, I wrote to the commissioners on the 29th6 informing them of it, authorizing them at the same time if they found it proper, to make the payment to the French bankers at Amsterdam, which they had a right to do under M. Dufresne’s letter of last year.7 M. de Montmorin had desired I would concert the present payment with him also. His absence in the country prevented his sending me his answer8 to my letter9 on this subject until the day after (the 30th.) in which he renewed his request to have this payment made to the French bankers at Amsterdam. By the next post therefore I wrote to the commissioners to make this payment.10 They recieved my letter on the evening of the 7th. of June at the same time that the French bankers recieved that of M. Dufresne. The rate of exchange had undergone a precipitate fall which had astonished every body, the more so as it far exceeded the progressive depreciation of assignats. The commissioners inform me in their letter of the 9th11 that on the day before they recieved my letter it had been 42½. The post from London bringing an account of a rise in the exchange between that place & Paris, it rose immediately at Amsterdam to 44. When the commissioners offered this money to the French bankers it was from 45 to 46, as quoted on the certified rate of exchange. Still the bankers refused recieving the money at less than 46. The commissioners refused paying it at that rate without express orders from me & wrote to me on the 9th. desiring instructions. In that letter they hint that this rise was owing in some measure to artificial measures. Probably they thought it in consequence of the intended reimbursement & they had no doubt it would immediately fall again. They add that they are determined not to make the payment without my orders & hope I may settle the matter so that they may remit it to Paris, not doubting but that in a very few posts the whole would be placed in the public treasury. On the 10th. they wrote me “After the departure of our respects of yesterday for the ordinary post Messrs. Hogguer Grand & Co. proposed to furnish us their draught for one million of guilders hence, leaving the course of exchange to be settled between you & M. Dufresne, which obviating all objection on our part we this evening remit this bill for that amount on the public treasury to M. Dufresne, with whom you will please adjust the sum the United States are to be credited for the same.”12
I was much mortified to learn the difficulty which had taken place at Amsterdam & still more so to find that the commissioners had thus thrown it on me. They must have been sensible that it was much less proper for me to litigate the rate of exchange with M. Dufresne, than for them with Messrs Hogguer, & also that I had much fewer data than they for ascertaining what the usages of the exchange of Amsterdam would entitle us to insist on in such cases.
In consequence of their letters to me & those of the French bankers to M. Dufresne we have had a meeting. He insists on 46. being taken as the rate of exchange, & thinks there can be no doubt that should be rate since it is certified as current at the time of the draught being dated. As the payment was not made as soon as it might have been on account of the difficulty between the American & French bankers & as the former protested formally against the rate being fixed at 46 I told him it was impossible for me to take on myself to fix it having no data for that purpose—that I know not what was the usage of the exchange of Amsterdam in such cases, but that it appeared to me there was no other way of settling the difficulty than by having the rate ascertained by indifferent persons on the spot, & that therefore we should refer it to the American & French bankers to be settled in that manner. He neither rejected or accepted this proposition but said he would write to Messrs Hogguer & Co. for further information & in this manner we separated. I have written to Messers Willink &c to make them acquainted with this circumstance & to express to them my mortification at their having thought it advisable to force me to dispute a matter of this sort with the French ministry.
M. Dufresne gave me his word that he had not used any means for having this momentary rise in the exchange effected in consequence of our intended payment to them & agreed it would have been unfair & beneath the dignity of government. It is evident also that the rise cannot be owing entirely to this circumstance since the letter of Messers. Willink &c of the 9th. informs me that the first start took place in consequence of the exchange of London on Paris coming quoted to Amsterdam at ¾ d Stlg per crown higher than the preceding post; & this was before our intended payment was known. It is possible however that the French bankers who recieved M. dufresne’s letter at the same time that my second one arrived for Messrs Willink &c may have made it known before the order was made for the purpose of contributing to the rise. If it is found that this was the case I have no doubt the French ministry will agree that the rise occasioned thereby should not be used to the disadvantage of the U.S. & you will certainly think that as far as the use was independent of that circumstance the U. S. should in justice submit to it. The more so as it is evident that the fall of the exchange at Amsterdam to 42½. was artificial & local since the exchange at Paris on Amsterdam did not fall to the same point but remained I think always above 44. I should mention also that one of the principal causes of the sudden fall of exchange caused at that time, viz the large sums that this government found it necessary to have brought from abroad in Specie. I suppose it useless to add that the exchange has gone on regularly declining for some time so that 46, the rate which M. Dufresne insists on for this payment is much below that at which the payment was made last fall & which you considered with reason as highly advantageous—it having been if I do not mistake about 50.
I hope you will excuse these minute details, Sir & that you will be of opinion with me; first that I ought not to have refused making this payment at Amsterdam being requested thereto by the French government, they agreeing to the current rate of exchange—2: that I take all reasonable precautions for avoiding the disadvantage of a sudden rise in the exchange on account of this payment—& 3. that if finally the French ministry agree that the rate should be settled at what impartial people may think it would have been independent of this payment, as I am persuaded they will, you will consider that the U. S. deserve all the advantages from it to which they are entitled. I will take care that for future payments there shall not be the pretext of a difficulty.
Having said so much in explanation of what concerns myself, it is but justice that I should add with respect the bankers of the U. S., that although they were certainly not satisfied with the mode of payment which I thought myself obliged to prescribe, still I am persuaded they have in this instance acted agreeably to what they considered the interest of the U. S. in making the difficulty. Considering the rise as artificial & momentary on the day after recieving the order for payment, they refused to make it at the rate Messrs Hogguer & Co. insisted on—this was the 8th.—finding that the rise continued on the 9th. & 10th. & not knowing where it would stop, they determined to make the payment, thus extricating themselves from the embarrassment & leaving me to dispute the rate at which it should be settled. I have the honor to be with perfect respect Sir your most obedt. humble servt.
The Honble Alexander Hamilton Secretary of the Treasury
ALS, letterpress copy, William Short Papers, Library of Congress.
1. Jean Baptiste de Ternant, French Minister Plenipotentiary to the United States.
2. Hogguer, Grand, and Company.
3. Willink, Van Staphorst, and Hubbard, the United States bankers in Amsterdam.
5. Short to Willink, Van Staphorst, and Hubbard, May 26, 1791 (ALS, William Short Papers, Library of Congress). This letter is printed as an enclosure to Short to H, June 10, 1791.
6. Short to Willink, Van Staphorst, and Hubbard, May 29, 1791 (ALS, letterpress copy, William Short Papers, Library of Congress).
7. See note 4.
8. Comte de Montmorin to Short, May 30, 1791 (LS, William Short Papers, Library of Congress).
9. Short to Montmorin, May 29, 1791 (ALS, letterpress copy, William Short Papers, Library of Congress).
10. See Short to Willink, Van Staphorst, and Hubbard, June 3, 1791 (ALS, letterpress copy, William Short Papers, Library of Congress).
11. Willink, Van Staphorst, and Hubbard to Short, June 9, 1791 (LS, Short Family Papers, Library of Congress).
12. Willink, Van Staphorst, and Hubbard to Short, June 10, 1791 (LS, Short Family Papers, Library of Congress).